Watch Your Language | #retirement | #elderly | #seniors
How we view and define retirement has undergone a philosophical change. There are multiple factors at play, including longer lifespans, more active lifestyles, supporting or caregiving for family members, lack of traditional pensions, and rising health care costs. These have all added more complexity and disparity to how people live in retirement.
With this new mentality comes a seismic shift toward helping defined contribution (DC) plan participants turn their retirement plan savings into a stream of income that may need to last for 20 or more years. Positively, 65% of all participants in our latest 2021 DC language study felt their DC plan played a critical role in helping with retirement planning, yet just two in 10 recall receiving communications from their employer about turning their DC plan savings into income. Plan sponsors today must re-think how they approach their plan design, investment menu, and communications strategy as participants shift their mindset from retirement savings to retirement income.
Over the past 10 years of language studies, we’ve found that using the right words helps provide clarity to employees. Participants often find their DC plans confusing and wish for clearer language — with less industry jargon — to help them understand their options and make more informed decisions. Plan sponsors can help close the gap of confusion and misunderstanding by carefully selecting words that truly resonate with participants.
This year’s study offers insight and guidance into the impact language can have on plan participant’s overall understanding of their DC plans. In our findings we offer three actionable insights to help improve their understanding and behavior:
1. Demystify the investment menu with the right language.
Plainspoken language may help participants more easily understand their investment options.